Malaysia’s planned leadership transition at the end of March from Ahmad Abdullah Badawi to Mohamed Najib Razak masks a fundamental reconfiguration of Malaysian politics. The United Malays National Organization is in long-term decline, after losing support among Malays for at least a decade. Non-Malays are increasingly reluctant to back the 12 other parties in the UMNO-led National Front coalition, especially those representing ethnic Chinese and Indian minorities, given their limited ability to influence government policy. Doubts that the National Front will be viable much longer without a major overhaul are mounting at a time when the political opposition is surging, reorganized and invigorated by the charismatic former deputy premier, Anwar Ibrahim.

The magnitude and complexity of Mr. Najib’s challenge can be gauged by the fate of the hapless Prime Minister Abdullah, who is being forced out early in his second term by UMNO power brokers after losing five of 13 state governments and the National Front’s two-thirds majority in Parliament in last March’s general election. Mr. Abdullah recognized what needed to be done: He won a landslide in 2004 by promising to end pervasive corruption, substitute transparency for cronyism and inject integrity into weakened state institutions. When he failed to deliver, obstructed by entrenched UMNO interests and hobbled by lassitude, he was punished by the electorate last year—and UMNO’s inexorable slide resumed.

Mr. Najib’s background doesn’t recommend him for the role of reformer, which is what is required to recover the affection of disenchanted voters. The son of the country’s second premier, Abdul Razak Hussein, and a nephew of Hussein Onn, the third premier, Mr. Najib is from an aristocratic family that is staking its claim to be Malaysia’s first political dynasty. A cousin, Mr. Hussein’s son Hishammuddin Hussein, is education minister and head of UMNO Youth. The youngest member to sit in Malaysia’s Parliament, Mr. Najib was only 22 years old when he was elected to represent the Pekan constituency formerly held by his father, who died in office in 1976. At 23, he was a deputy minister and at 29 he became chief minister of his home state, Pahang. Since joining then Prime Minister Mahathir Mohamad’s Cabinet at 32, Mr. Najib has held senior portfolios for the past couple of decades, without questioning the ethnic-based political system or proposing significant innovations in his areas of direct policy responsibility. “He is not only part of the system,” says one close associate and supporter. “He trusts the system. He is the system.”

Moreover, Mr. Najib brings to the job much political baggage. In particular there is the case involving an adviser to Mr. Najib of a Mongolian woman who was shot and blown up with specialized C4 plastic explosives in Malaysia in 2006. The adviser, the woman’s former lover, was cleared of ordering her death in a protracted court case that drew harsh public criticism and left vital questions unanswered. Two members of an elite police bodyguard unit assigned to Mr. Najib, who were asked by the adviser to “do something” about the woman because she was blackmailing him, have to answer murder charges. The adviser said he had contacted the two policemen through Mr. Najib’s aide-de-camp, and one of them, a chief inspector, testified that the aide-de-camp had instructed him to help the adviser.

Before the adviser was charged, Mr. Najib sent a text message to a lawyer representing his adviser saying that the adviser “will have to face a tentative charge but all is not lost,” according to a transcript of their exchanges. One of the country’s most popular bloggers and online journalist-editors, Raja Petra Kamarudin, faces sedition and libel charges after allegedly implicating Mr. Najib and his wife in the killing. Although Mr. Najib has denied ever knowing the victim, taking the unusual step of swearing his innocence in a mosque, he has been unable to stem an avalanche of gossip, speculation and serious analysis, much of it circulated on the Internet.

Mr. Najib also has long been embroiled in allegations of corruption in the purchase of big-ticket weapon systems during his two lengthy terms as defense minister (1990-95, 1999-2008; he retained the defense portfolio after becoming deputy prime minister in 2003), when he drove an aggressive military modernization program. According to Foreign Policy in Focus, a Washington-based think tank, foreign arms manufacturers use well-connected Malaysians as lobbyists, paying them commissions of 10% to 20% to win contracts. Malaysia’s political opposition says much of the money goes to people closely associated with UMNO, including Mr. Najib’s contacts, though the police and anticorruption authorities have not investigated particular cases to the satisfaction of complainants.

For example, the 115 million euros “coordination and support services” payment for Malaysia’s purchase in 2002 of two new Scorpene and one reconditioned Agosta submarine for 1 billion euros was paid to Perimekar Sdn. Bhd. Perimekar at the time was owned by a company called K.S. Ombak Laut Sdn Bhd.—later by two other companies as well—which was in turn owned by Abdul Razak Abdullah Baginda, the Najib adviser who stood trial for abetting the murder of the Mongolian woman. The Defense Ministry denied paying a commission and said Peremkear was awarded a genuine contract to support the acquisition of the submarines.

Why UMNO would opt for such a beleaguered leader says a lot about the mood of the party and the depth of the crisis confronting it. Just how much Mr. Najib represents the old order and not a fresh start is reflected in one salient fact: Although Mr. Najib at 55 years of age is considerably younger than Mr. Abdullah, 69, Mr. Najib has been active in politics longer. And yet, within UMNO Mr. Najib is the only candidate to succeed Mr. Abdullah as president. After a series of rule changes during the lengthy Dr. Mahathir presidency, UMNO is tightly controlled, with power concentrated at the top—at division, state and national level—and the 3.2 million ordinary members having little say in party affairs. UMNO veteran Tengku Razaleigh Hamzah, a finance minister from a bygone era, attempted to challenge Mr. Najib, but needed nomination by 30%, or fifty-eight, of UMNO’s 191 divisions, one of many rules adopted to protect the leadership. Tengku Razaleigh got one nomination, his own Gua Musang division.

Musa Hitam, a former deputy prime minister and respected party elder, has diagnosed UMNO’s problem as one of old age, with “introverted” party leaders preoccupied with self-interest and oblivious to public concerns about corruption, abuse of power and lack of accountability. The accuracy of his assessment was demonstrated as UMNO heavyweights maneuvered late last year to discard Mr. Abdullah, reluctant to allow him time to implement promised anticorruption, judicial and other reforms. Indeed, influential sections of UMNO strongly resisted the reforms, apparently fearful that independent agencies and courts might put an end to many of the money-making arrangements that have alienated the public. No discernible progress was made in combating so-called “money politics,” an entrenched system of payments in cash and kind that puts a price on nearly every post in UMNO in expectation of contracts and other business opportunities in return.

UMNO, of course, is not Mr. Najib’s only immediate concern. With limited experience in finance, he must prepare to steer Malaysia through the global recession that is engulfing the region. He also is under pressure to address the extremely sensitive issue of affirmative action, still known colloquially by its original name, the New Economic Policy. This is a source of acute unhappiness among not just ethnic Chinese and Indians, but also increasing numbers of Malays without the right political connections. Economists and business executives blame the NEP for undermining Malaysia’s competitiveness when China and India loom large, while much of the corruption that taints UMNO can be traced to abuses in various NEP programs to assist bumiputras, predominantly Malays.

Mr. Najib as well must match wits with the opposition’s Anwar Ibrahim, a skilled, articulate and seasoned political strategist whom Mr. Najib was happy to acknowledge as a superior when they were allies in UMNO. Mr. Anwar has long declared that Mr. Najib is not an acceptable leader of Malaysia while he fails to clear doubts about both the murder and military commissions. It may not quite add up to a perfect storm that will break over Mr. Najib’s head when he is installed as premier, but he is unlikely to be given the customary honeymoon period that would allow him to settle in with ease.

More energetic and purposeful than Mr. Abdullah, however, Mr. Najib is aware of the need to respond promptly to the multitude of challenges, according to the long-time associate. He points to the action Mr. Najib took after he nearly lost his parliamentary seat 10 years ago as an example of his ability to focus on a problem. In the 1999 general election, dominated by Mr. Anwar’s dismissal and marked by mass defections from UMNO, Mr. Najib’s 10,793 majority in Pekan fell to just 241 votes. Shocked and conceding he had been guilty of neglect, says the associate, Mr. Najib subsequently visited the constituency regularly and encouraged development that helped turn Pekan town into an industrial hub to complement its agricultural base. In the 2004 election, even allowing for the gains from Mr. Abdullah’s overwhelming victory and a drastic boundary delineation exercise that almost doubled the number of Pekan voters, Mr. Najib’s winning margin was stratospheric: 22,922 votes. And he substantially increased his majority to 26,464 last year, despite the government being struck by what was called an electoral tsunami.

Traditionally Malay, Mr. Najib has always taken pains not to appear overly ambitious, preferring to do his politicking behind the scenes with the help of allies. In retrospect, it was a sensible strategy under Prime Minister Mahathir, since he eliminated three prominent UMNO rivals, two of them his deputies, whom he felt threatened his leadership. Buoyed by his pedigree, Mr. Najib has long given colleagues the impression that he expects to inherit his father’s crown in time by patiently building bases in the bureaucracy, business and UMNO. His vast network of loyalists makes him the best connected politician in Malaysia. Many of his followers in the party go all the way back to when he was UMNO Youth chief, says political analyst Joceline Tan, and now a large number of them are heads of divisions, “powerful warlords who call the shots on the ground.”

Significantly, it was when Mr. Najib was acting head of UMNO Youth in 1987 that he sounded a discordant racial note, which raised questions about him in the minds of non-Malays and dogged him for years. It came as communal tension had been building for weeks and he led a huge rally in Kuala Lumpur to confront what was perceived as a Chinese threat to Malay special rights. In the air were ethnic grievances on both sides, though the immediate issue was the government appointment of non-Mandarin-speaking Chinese to administrative posts in Chinese-medium primary schools. As party barriers were overrun by ethnicity, two National Front members, the Malaysian Chinese Association and Gerakan, joined with the opposition Democratic Action Party on occasions in defense of Chinese interests. Mr. Najib was photographed at the demonstration with several other UMNO Youth leaders, wearing white headbands with fists raised, above a banner naming four high-profile opponents, all ethnic Chinese and Indian (though one was a Muslim) and the words, “destroy them.” Followers waved other banners bearing racially provocative slogans. “Our elders should not compromise anymore,” said Mr. Najib. “We are simply fed up.”

Over the years, Mr. Najib was thought to have lived down any suggestion that he is a Malay supremacist. Most analysts attributed his lapse to youthful enthusiasm to prove his Malay credentials and confirm his leadership of UMNO Youth. Almost nobody who knows him thinks he harbors anti-Chinese or anti-Indian sentiment. But the past may be returning to haunt him, as some opponents harp again on the 1987 incident and embellish it with all sorts of extremist actions. A recent opinion poll showing Mr. Najib’s support among Chinese and Indian Malaysians to be only half or one-third that of Malays indicated the campaign to paint him as an extremist may be having an impact. Mr. Najib himself remains sensitive to accusations of chauvinism. “I’m not racist,” he volunteered privately to an opposition member of parliament after last year’s electoral setback, pointing out he had Chinese friends to affirm it.

Another reason middle-class Malaysians remember the 1987 episode is that Dr. Mahathir used the ethnic conflict to justify the biggest crackdown on dissent in Malaysia’s history, codenamed Operation Lalang. The police arrested 119 people over a few months and held them without trial under the Internal Security Act. They included the then parliamentary opposition leader, Lim Kit Siang, other members of parliament and state assemblies, academics and many social activists who had not participated in the ugly communal exchanges. Some, including Mr. Lim, were jailed for two years. It remained a sore point in the community that none of the prominent UMNO protest organizers, especially Mr. Najib, was detained.

Mr. Najib did himself no favor when he declared in 2007 that Malaysia was an Islamic state and had never been secular, igniting a firestorm. His comment contradicted the historical record and split Mr. Abdullah’s cabinet and the community when the country was supposed to be celebrating 50 years of independence. While Mr. Abdullah sought to quell the debate with a statement that Malaysia was neither a theocratic nor a secular state but a parliamentary democracy, Chinese and Indians found a further reason to be wary of Mr. Najib.
Nonideological like most UMNO politicians, Mr. Najib has moved in and out of informal political alliances as opportunities presented themselves. Crucially, he supported Prime Minister Mahathir in 1987, when he was challenged for the party presidency by Tengku Razaleigh Hamzah, who had been groomed by Mr. Najib’s late father.

Mr. Najib was part of Anwar Ibrahim’s so-called Vision Team that swept into office in UMNO in 1993, when Mr. Anwar marshaled so much support he forced then Deputy Prime Minister Ghafar Baba to withdraw from the contest for deputy president of the party. Comprising then Youth and Sports Minister Muhyiddin Yassin and then Selangor Chief Minister Muhammad Muhammad Taib, as well as Mr. Najib, the Vision Team took all three vice president’s posts, though the team disintegrated the following year.

Mr. Najib’s allegiance to Dr. Mahathir eventually paid off, though not before Mr. Najib suffered a huge disappointment and endured many anxious moments about his future. In 1998, Dr. Mahathir passed over Mr. Najib and chose Mr. Abdullah Badawi, a former member of Tengku Razaleigh’s dissident faction, to replace the sacked Mr. Anwar as deputy prime minister. Dr. Mahathir explained later that he hoped Mr. Abdullah would occupy the prime minister’s office for one term and then make way for the younger Mr. Najib. In fact, Mr. Najib—more personable, eloquent and better educated, with a degree in industrial economics—was Dr. Mahathir’s first preference to succeed him. But since he had dismissed Mr. Anwar as morally unfit and the government was under pressure from the sectarian Parti Islam SeMalaysia (pas), Dr. Mahathir opted for Mr. Abdullah, who did not smoke or drink and had impeccable Islamic credentials.

Although Mr. Abdullah duly named Mr. Najib his deputy in 2003, he did so only after Dr. Mahathir publicly pressured him, and Mr. Abdullah later showed no interest in retiring after his first term. As Dr. Mahathir waged open warfare on Mr. Abdullah from 2006 for abandoning many of the former premier’s projects and policies, he tried to goad Mr. Najib into open revolt against the prime minister, at one point branding him a “coward” for not doing so. But Mr. Najib preferred to wait for his turn, publicly playing the loyal deputy while working his extensive factional network in UMNO to ensure his succession.

Although long, Mr. Najib’s record offers few clues as to how he might approach his prime ministerial assignment, beyond acting cautiously and pragmatically. So light has been his ministerial touch, except in defense, that it is hard to establish where he stands on major issues, or how he would like Malaysia to adapt to the strong currents buffeting the country, from globalization externally to so-called “creeping Islamization” within. The charitable explanation is that he was long overshadowed by the dominant Dr. Mahathir, who involved himself in almost every major policy his administration pursued for 22 years.

One area where Mr. Najib did leave his mark is education, although typically it was Dr. Mahathir who took the initiative to liberalize policies in an effort to turn Malaysia into an education hub in the region. Education Minister from 1995-99, Mr. Najib introduced in 1996 the Private Higher Educational Institutions Act, which allowed private foreign universities to establish campuses in Malaysia and grant degrees. It was one of several measures that created more options for students, especially nonbumiputras. The number of private universities rose to 16 in 2001 from zero in 1995, while the number of private colleges more than quadrupled to 690 in 2001 from 156 in 1992. Mr. Najib also pleased nonbumiputras by amending other legislation so that the minister no longer had the power to convert Chinese- and Tamil-medium primary schools into national schools. The Chinese and Indian communities interpreted the move as strengthening existing commitments that they would continue to have their own mother-tongue education.

As a survivor who has been through the mill and does not fluster easily, Mr. Najib faces a challenge not unlike what confronted his father, Razak, after the 1969 general election, the only other time that the Malaysian government lost its two-thirds parliamentary majority. After bloody racial riots in the wake of the poll and the suspension of Parliament, Razak broadened the three-party Alliance into the National Front by co-opting opposition parties to widen its appeal, and adopted the NEP to help close the economic gap between the Malays and the Chinese. Nearly 40 years later, one key to Mr. Najib’s success may be to dismantle his father’s economic legacy, which is now impeding development, widening inequality and perpetuating ethnic fissures in society. Mr. Anwar has proposed a Malaysian Economic Agenda to replace the NEP and help all needy Malaysians rather than bumiputras alone. As Mr. Najib’s brother, Nazir Razak, chief executive of Bumiputra-Commerce Holdings Bhd., the country’s second largest bank, observed, “It doesn’t take much genius to look at some of the present policies arising from the NEP that are undermining national unity and also investment.”

Overhauling the NEP would take political courage, however, since any dilution of affirmative action potentially threatens the entire patronage network on which the UMNO edifice is built. And, in Mr. Najib’s case, he has been put in charge, implicitly, to nurture and protect the system rather than undermine or overturn it. His limited room for maneuver was obvious when he commented that the NEP would be liberalized and eventually abolished. Although the backlash from vested Malay interests forced him to retreat, Mr. Najib persisted with the liberalization of rules covering new listings on Bursa Malaysia. Stressing that 30% bumiputra equity participation remains government policy, he said companies that could not attract bumiputra investors would be able to sell their shares to the wider public. A relatively bold move, it is likely to be the model as Mr. Najib proceeds with his juggling act: to maintain the form but gradually abolish the substance of the nep.

For similar reasons, Mr. Najib is unlikely to attempt to clean up UMNO, since that would antagonize the divisional warlords and others who delivered the votes for him and now expect to reap the business rewards. As the close associate of Mr. Najib puts it, “He won’t cut his own throat.” Having been protected from challenge by the widely criticized quota system in UMNO elections, Mr. Najib has retained it. And he has dampened expectations that he will put a quick end to corruption in the party, which is so endemic that Tengku Ahmad Rithaudeen, chairman of UMNO’s disciplinary board, suggested the elimination of four subordinate wings, including the male and female youth sections, in an effort to reduce the number of internal elections and limit bribery to buy posts. Ruling out such radical surgery, Mr. Najib said vote-buying in the party must be fought with “political will,” thus adopting much the same stance as his predecessors.

Mr. Najib has talked often of the need for the National Front to change to meet public aspirations, warning that “If we don’t have the courage to change, the people will change us” at the next general election. But almost everything about Mr. Najib proclaims the status quo. Among other things, he has defended the Internal Security Act, adopted originally to counter communist subversion, though sometimes used by the government against legitimate political opponents and even by one faction of UMNO against another. While praising the Internal Security Act for keeping Malaysia safe from terrorism, Mr. Najib acknowledged “some controversies relating to how the act has been used lately,” which he said would be addressed at an unspecified point “in future.” As academic analyst Ooi Kee Beng wrote, “No nominee for the top posts in the coming party elections can be taken seriously as a possible agent of change.”

Leading the government campaign in two high-profile by-elections, Mr. Najib lapsed easily into old habits, notwithstanding his rhetoric extolling change. After Mr. Anwar scored heavily last August to regain his Permatang Pauh parliamentary seat, conveniently kept warm for a decade by his wife, Mr. Najib called on UMNO to reclaim the party’s dignity by retaining the Kuala Terengganu constituency it won in 2008. UMNO fielded a deputy minister who, though locally born, had served as the prime minister’s political secretary and was seen as elitist and identified with Mr. Abdullah’s discredited leadership. To compound the error, Mr. Najib tried to secure victory the familiar way by doling out tens of millions of U.S. dollars in projects, including government contracts for nearly 600 Malay small-contractors on one occasion. Still he failed to meet the mood for change in the country, and the seat fell to the opposition.

Once in office, Mr. Najib is expected to rejuvenate the government by appointing a number of new ministers and tightening management of the country. He will try to meet economic goals by reducing waste and improving performance in a bloated and fairly inefficient bureaucracy, according to associates. Recognizing that he will not be able to disband the patronage network, the associates suggest, Mr. Najib will seek to open the system and spread the benefits more widely.

A pertinent question is how well the blue-blooded Mr. Najib can relate to ordinary Malaysians and persuade them he feels their pain in the economic downturn. One of the Four Noblemen of the Pahang Royal Court by virtue of an inherited title, Mr. Najib completed his secondary education at a boy’s college in Worcestershire before attending Nottingham University. Polished, with receding gray hair and moustache, he speaks competent English and cuts a worldly figure. “I am equally comfortable sitting in a surau in my constituency or having dinner at Simpson’s on the Strand,” he was once quoted as saying, referring to an upscale London restaurant. Some of his comments, though, have suggested he might be more at home with cosmopolitan diners than local worshippers. Mr. Najib’s recommendation, in response to unpopular fuel price rises in 2006, that people adjust their lifestyle, “like using public transport,” struck many as similar to the “let them eat cake” comment popularly attributed to Marie Antoinette before the French Revolution. Two years later, Mr. Najib still seemed to be grasping for the common touch, when he advised UMNO leaders to be humble and friendly towards “village folk,” whom he said were not hard to please. “When we are in our car, we cannot fall asleep as we won’t be able to wave back at them,” he said. “Otherwise they could feel hurt.”

A danger for Mr. Najib is that he has left himself exposed to ridicule by his fiercest political opponents, who will not accord him the minimum respect due to a Malaysian leader. At points during the Kuala Terengganu by-election, as in Permatang Pauh earlier, he was greeted with posters of the murdered Mongolian woman, Altantuya Shaariibuu, and chants of “Al-tan-tu-ya,” or worse. The protesters were invariably supporters of Mr. Anwar’s People’s Justice Party. Mr. Najib seemed to recognize the excruciating embarrassment when he sent a private message to dap leaders, Secretary General Lim Guan Eng and his father, Lim Kit Siang. Mr. Najib told a dap legislator he appreciated the Lims for not “being personal,” meaning that in their criticism of the Mongolian case they have stopped short of vilifying him.

Implicitly confirming that he sees Mr. Anwar as his prime threat and target, Mr. Najib also told the opposition legislator that he would like to find ways to cooperate with the dap-led Penang state government. pas has not given priority to the murder, believing most Malays have made up their minds and there are few votes to be won on the issue. While the dap has pursued the matter, it has focused more on the legality of the case rather directing accusations at Mr. Najib. In addition to making life uncomfortable for Mr. Najib over the killing, Mr. Anwar, with his organizational skills, is seen as the lynchpin of the People’s Front, which groups the three opposition parties. Mr. Najib recognizes that the Anwar bandwagon must be derailed if UMNO and the National Front are to survive.

Mr. Anwar and Mr. Najib have been headed for a showdown since mid-2008, when Mr. Anwar was charged, for the second time in a decade, with sodomy. After photos surfaced showing Mr. Anwar’s accuser, Mohamad Saiful Bukhari Azlan, with a Najib aide, Mr. Najib said Mr. Saiful had visited his office three months earlier in relation to a government scholarship. Later, though, Mr. Najib admitted Mr. Saiful had visited his home and discussed the alleged sexual attack before lodging a police complaint against Mr. Anwar. Opposition claims of a conspiracy against Mr. Anwar included pointing the finger of suspicion at Mr. Najib.

Considering that opinion polls have shown that most Malaysians do not believe the allegations against Mr. Anwar and that they are damaging the country’s reputation, Prime Minister Najib could consider dropping the charges. It might relieve some of the pressure on the government and deny Mr. Anwar a platform to claim persecution and attract more sympathy and support at home and abroad. But judging by Mr. Najib’s intervention in Perak in February, in which he encouraged defections to topple the People’s Front state government, he seems eager to indulge what have been called his “street-fighting instincts” against Mr. Anwar. The prospect of securing a conviction and eliminating Mr. Anwar from politics, however slim, may prove irresistible.

Some critics have suggested that Mr. Najib, with Dr. Mahathir’s backing, might be tempted to return to Dr. Mahathir’s authoritarian ways and use political turmoil as a pretext for detaining opponents or declaring emergency rule. But, initially at least, Mr. Najib hopes to win support by conversation rather than coercion. In September, he launched a Web site (www.1Malaysia.com.my), which he was at pains to describe as personal, not official, so the public could engage in “open and honest dialogue directly” with him. “I do not believe in the politics of ‘deceive, divide and rule.’ Returning to our long-held belief in unity and mutual respect is more important now than ever,” he said in his initial message.

Although Mr. Najib pronounced himself happy with the response, three months before he was due to replace Mr. Abdullah, only 41% of Malaysians thought Mr. Najib would be a good prime minister. Even the inept Mr. Abdullah had a 46% approval rating in the poll, conducted by the independent Merdeka Centre. After waiting more than three decades for his moment to lead the nation, Najib Razak is taking over “without the burden of overly high expectations,” as one report put it, but burdened on almost every other score.

Barry Wain, a former editor of The Wall Street Journal Asia, is author of the forthcoming book Malaysian Maverick: Mahathir Mohamad in Turbulent Times.